Eurozone loan growth to firms and households marks time in April

Growth in lending to eurozone firms and households paused in April, official data showed yesterday, complicating the picture for the European Central Bank as it weighs ending its economic stimulus, reports AFP from Frankfurt Am Maim.

Adjusted for some purely financial transactions, growth in borrowing to firms was flat month-on-month, at 3.3 percent, ECB data showed.

Meanwhile lending to households expanded by 2.9 per cent, also the same pace as in March.

Overall, credit to the private sector in the 19-nation single currency area grew at 3.1 per cent last month, slightly higher than March as financial firms like pension funds and insurance companies borrowed more.

The pace of loan growth is a key indicator of financial health for the ECB as it considers when to withdraw its massive support for the eurozone economy.

Aiming to boost growth and stoke inflation to its target of just below 2.0 percent, the Frankfurt institution has set interest rates at historic lows and buys 30 billion euros ($35 billion) of government and corporate bonds per month.

Both policies are designed to pump cash through the financial system and into the real economy, where it can power investments, hiring and consumer spending.

April’s pause in loan growth comes as observers have pointed to a soft patch for the eurozone in early 2018 after an unexpectedly strong performance last year.

While some see slower first-quarter expansion and weaker confidence indicators as merely a blip, others suggest they could weigh on inflation in the coming months, pushing the ECB to delay weaning the bloc off its medicine.

 

Eurozone loan growth to firms and households marks time in April

Growth in lending to eurozone firms and households paused in April, official data showed yesterday, complicating the picture for the European Central Bank as it weighs ending its economic stimulus, reports AFP from Frankfurt Am Maim. Adjusted for some purely financial transactions, growth in borrowing to firms was flat month-on-month, at 3.3 percent, ECB data showed. Meanwhile lending to households expanded by 2.9 per cent, also the same pace as in March. Overall, credit to the private sector in the 19-nation single currency area grew at 3.1 per cent last month, slightly higher than March as financial firms like pension funds and insurance companies borrowed more. The pace of loan growth is a key indicator of financial health for the ECB as it considers when to withdraw its massive support for the eurozone economy. Aiming to boost growth and stoke inflation to its target of just below 2.0 percent, the Frankfurt institution has set interest rates at historic lows and buys 30 billion euros ($35 billion) of government and corporate bonds per month. Both policies are designed to pump cash through the financial system and into the real economy, where it can power investments, hiring and consumer spending. Aprils pause in loan growth comes as observers have pointed to a soft patch for the eurozone in early 2018 after an unexpectedly strong performance last year. While some see slower first-quarter expansion and weaker confidence indicators as merely a blip, others suggest they could weigh on inflation in the coming months, pushing the ECB to delay weaning the bloc off its medicine.